Court of Auditors on EU budget: Without new own resources, significant shortfall risk

Brussels – A reminder to Heads of State and Government: approve new own-resource mechanisms for the EU to safeguard the functioning of the European Union. Signed: the EU Court of Auditors. The auditors in Luxembourg intervened in the ongoing political negotiations on the next seven-year budget (MFF 2028–2034) with a special report highlighting structural shortcomings in the process of scrutinising past budgets, risks for the future, and necessary corrective measures.

First and foremost, there is one figure that is causing concern among the auditors in Luxembourg: the estimated error rate in EU expenditure rose from 3.6 per cent in 2024 to 3.8 per cent in 2025. In this misuse or irregular use of EU funds, the errors identified are described as “both significant and widespread”, resulting in a negative assessment of overall expenditure for the seventh year running. The highest error rates are found in cohesion funding, which supports employment, growth, and regional development, as well as in expenditure on agriculture and the environment. More specifically, the error rate in cohesion funds rose from 5.7 per cent in 2024 to 6.6 per cent in 2025, while for agriculture and the environment it increased from 2.6 per cent to 3.9 per cent. 

The most commonly identified problems were the funding of ineligible projects or costs (51 per cent of the total error) and failure to comply with public procurement rules (26 per cent). The third type of irregularity concerned payments for which no supporting documents were provided (19 per cent).

Irregularities in Recovery funds supplementing the budget

The current Multiannual Financial Framework (MFF 2021–2027) provides for a portion of funding to come from the Recovery Mechanism, which includes the Recovery Fund. In some cases, these special resources for post-pandemic recovery are in addition to traditional programmes, resulting in additional funding. However, in this context, irregularities have also been identified in the 45.4 billion euros spent under the Recovery Fund, including targets and objectives that were not satisfactorily met, as well as issues relating to double funding and the eligibility period.

https://www.eunews.it/en/2024/04/02/eca-recovery-guarantees-dumped-on-future-generations/

On the subject of the Recovery Fund, the Court criticises Member States for delays in requesting and using the funds, and the Commission for miscalculating: grants from the Recovery Fund disbursed by the end of 2025 totalled 237.5 billion euros (66 per cent) of the 359.9 billion euros in commitments made. Therefore, 122.4 billion euros remains available for disbursement by the end of 2026. However, as the Court of Auditors notes, “this is considerably higher than the Commission’s July 2024 estimate, which projected payments of 70.1 billion euros for 2026”.

“Ambitious budgets demand equally ambitious safeguards”, said ECA President Tony Murphy, who warns about the negotiations underway for the next multi-annual budget: “If the EU moves to a new budget model where financing is no longer linked to costs, we must learn from experience and address what has not worked before, so that EU funds deliver the intended outcomes for citizens.”

The debt issue

Then there is the issue of overall debt and the risks to future commitments. This warning is nothing new, but the Court of Auditors warns once again that the “EU’s growing debt could put increasing pressure on future budgets.” To be clear, “the EU’s borrowing could reach one trillion euros by 2027”, largely due to the NextGenerationEU post-pandemic recovery mechanism, while “interest costs alone for NGEU (NextGenerationEU) non-repayable support over 2028-2034 could be as much as €93 billion.”

Furthermore, the Commission’s proposals for the next budget also allow “substantial new borrowing to support Ukraine,” Member States’ national plans, and the possible use of the Severe Crisis Mechanism. “The sums involved could be considerable.” For example, loans to Ukraine approved or agreed since 2014, including the 90 billion euros loan to assist Ukraine, decided upon in early 2026, totalled 170.1 billion euros, of which 70.3 billion euros had already been disbursed by the end of 2025.

The Court therefore urge “caution in respect of future budgets” and calls on leaders to approve the proposals for new own resources: “Without an agreement on new sources of revenue, the EU budget could face a significant shortfall, forcing difficult choices such as higher national contributions and lower ambitions.” The Court of Auditors has entered the ongoing debate.